Volkswagen hopes revamped Golf will help it catch Toyota

Reuters

Reuters

Thomson Reuters is the world's leading source of intelligent informatiom for businesses and professionals. It combines industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, healthcare, science and media markets.

Volkswagen is hoping a sleek makeover will keep its Golf in the best-selling compact car spot, helping the German automaker overtake Toyota and GM as the world leaders. By Andreas Cremer.

But the mid-range vehicle faces an onslaught of competition from cheaper and premium models, just as car makers grapple with an economic slump in Europe and slowing growth in China.

VW has reported record deliveries and higher profits while rivals have struggled. However the seventh-generation Golf, to be unveiled in Berlin on Tuesday, may not be enough to keep Europe's biggest automaker on its winning streak, analysts say.

"Success of the new Golf is absolutely critical to VW's expansion targets but the new version will be battling in a tough environment," said Stefan Bratzel, head of the Center of Automotive Management think-tank near Cologne, Germany.

Volkswagen is on course to bump General Motors into the world no.3 ranking this year. It aims to sell a world-leading 10 million vehicles by 2018, up from the 8.36 million recorded last year, and push past Toyota.

The new hatchback will boast a range of features aimed at luring buyers away from cheaper rivals made by Hyundai, Skoda and Seat, volume makers including Peugeot Citroen and GM's Opel division, as well as from Audi and BMW at the top end.

Pricing has not yet been announced for the new Golf, which will be sleeker and more than 100 kilograms lighter than its predecessor, thanks to increased use of ultra-strong steel, making it cheaper to run and cutting emissions.

The 140-horsepower petrol version will produce an average 112 grams of CO2 per kilometer, complying with European Union targets. It will also be 2.24 inches longer and 0.52 inches wider than its predecessor, enlarging the interior to compete more effectively with SUVs and minivans.

To attract luxury buyers, VW is touting a higher quality cockpit finish with more screens and driving assistance gadgets aimed at fending off a sporty replacement of Daimler's Mercedes-Benz A-Class and the new BMW 1-Series introduced last year.

This may still not be enough to keep the competition at bay.

"The European (compact) market is fully saturated and the Golf keeps attracting competition, even from within the VW group," said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, citing the Audi, Skoda and Seat brands.

"It's no synonym for future growth."

RATTLED

Research firm IHS Automotive is confident the Golf, with over 29 million global sales since its 1974 launch as the iconic Beetle's successor, will keep the top spot.

Sales will rise 17.3 percent to 630,000 units by 2017, it predicts, followed by Toyota's Prius with an 18.7 percent gain to 488,000 and Ford's Focus with a 2.4 percent decline to 443,000.

But there are signs the company is worried.

With its affiliate Kia Motors, Hyundai is the envy of global rivals such as VW, outgrowing the market during a severe downturn by offering stylish models at affordable prices backed by savvy - if sometimes risky - promotions and helped by a cheaper currency.

VW views Hyundai as a serious contender. Checking out a Hyundai model at the 2011 Frankfurt Motor Show, chief executive Martin Winterkorn was caught on camera examining the steering wheel adjustment, and saying: "Nothing rattles ... Why can they do it? BMW can't. We can't."

The YouTube video has had almost 1.8 million hits.

UNTESTED

A risk for VW is that it is building its updated bread-and-butter car on a new modular platform, that will allow it to enhance parts-sharing among its car brands.

While the new technology aims to make production of 3.5 million small- and mid-sized cars 20 percent cheaper, and shorten assembly by 30 percent, the scaling up means any defects could expose VW to the kind of mass recalls that blighted Toyota Motor Corp in 2009-2010.

The updated Audi A3 compact, a competitor from within the VW family stable, will be built using the same cost-saving architecture.

The Golf is so crucial to VW's success that it is the only model the company builds on four continents.

VW expanded production of the Golf to a new plant in Osnabrueck, Germany last year, even as the financial crisis exposed chronic overcapacity elsewhere in Europe, forcing rivals Fiat and Opel to close factories in Sicily and Belgium.

"The Golf has a preeminent role at VW because of its high production volumes," VW brand development chief Ulrich Hackenberg said recently. "It's the face of VW." DM

Photo by Reuters

Reuters

Reuters

Thomson Reuters is the world's leading source of intelligent informatiom for businesses and professionals. It combines industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, healthcare, science and media markets.

Reader notice: Our comments service provider, Civil Comments, has stopped operating and will terminate services on 20th Dec 2017. As a result, we will be searching for another platform for our readers. We aim to have this done with the launch of our new site in early 2018 and apologise for the inconvenience.